The heterotrimeric mTORC1 protein kinase nucleates a signaling network that promotes cell growth in response to insulin and becomes constitutively active in cells missing the TSC1 or TSC2 tumor suppressors. Insulin stimulates the phosphorylation of S6K1, an mTORC1 substrate, but it is not known how mTORC1 kinase activity is regulated. We identify PRAS40 as a raptor-interacting protein that binds to mTORC1 in insulin-deprived cells and whose in vitro interaction with mTORC1 is disrupted by high salt concentrations. PRAS40 inhibits cell growth, S6K1 phosphorylation, and rheb-induced activation of the mTORC1 pathway, and in vitro it prevents the great increase in mTORC1 kinase activity induced by rheb1-GTP. Insulin stimulates Akt/PKB-mediated phosphorylation of PRAS40, which prevents its inhibition of mTORC1 in cells and in vitro. We propose that the relative strengths of the rheb- and PRAS40-mediated inputs to mTORC1 set overall pathway activity and that insulin activates mTORC1 through the coordinated regulation of both.